ABSTRACT
In one direction the depreciation and fluctuation of the exchanges which have been characteristic of the post-war period has led to particularly interesting and unexpected results. This is in the calculation of customs duties. It clearly makes a great difference, when duties are being calculated on the foreign currency in which the invoice is made out, whether that currency is converted at the par value or at the exchange of the day. It is evident that if the par rates are taken as the basis of calculation, countries with a depreciated rate of exchange are penalized in comparison with countries whose rates have not depreciated, or not depreciated to so great an extent. Exchange arbitrage thus consists of utilizing for profit the different conditions temporarily obtained in other markets, and is a levelling operation which is always tending to make conditions in the various markets uniform.
